Choosing a business bank account is a really important decision for any entrepreneur. Not only because it’s where you keep your hard-earned money, or the fact that you’ll use it on a daily basis. There’s also long-term implications – at some point you may need to ask your for a bank loan, or take out business insurance.
And with so much to consider, it’s important to get this right.
How to Choose Your Business Bank Account
Zervant has gathered all the information you need right here. We’ve looked at why you need a business bank account, where to look for one, and how to decide on the best option for you and your business.
Is a Bank Account Even Worth It for Small Businesses?
There’s always the temptation to skip this step entirely. It’s not a legal requirement for sole traders (limited companies are slightly different). Plus banks hardly have the best track record when it comes to looking after the little man. So if you’re good with numbers and run a tight ship, why bother with the added hassle, not to mention cost?
“Setting up a business bank account is all about short-term pain for long-term gain.
As Victorian economist Walter Bagehot wrote, “adventure is the life of commerce, but caution is the life of banking”. Entrepreneurship is about risk-taking, but NOT when it comes to your business’ finances.
For one thing having a separate business bank account makes it easy to prove to HMRC that you’re running a legitimate business. And this comes in very handy when trying to claim business expenses, doing tax returns, or any other type of financial reporting. It’s also a statement of intent, a way of showing the world you’re serious about your offering.
But even if it’s clear you should definitely have a business bank account, where to look for one is slightly more tricky.
What to do?
Listen to Other Entrepreneurs, Trust Your Instinct
Time is a luxury in the world of small business. But it’s definitely worth trying to find a few extra hours to see what’s on offer when it comes to business bank accounts. And as with any product or service, existing user feedback is your best source of information.
The Business Banking Insight project is an excellent starting point. It’s an independent comparison site that surveys thousands of small business owners about their banking experiences. Hear first-hand how banks treat their entrepreneurs!
As a small business owner, you’ll also know the importance of instinct and gut feeling. Make sure you opt for a bank that makes you feel comfortable, somewhere you know there’s always a helping hand when you need it. Do not underestimate this factor. You’ll be spending a lot of time with your bank.
Banking Charges You Need to Be Wary of
There are lots of facts and figure to bear in mind when choosing a bank account. If you’re growing a little tired of all the number crunching, just make sure you bear these 3 key figures in mind:
- Standing Charges. Some banks will charge you just for having a bank account with them (typically every month or quarter).
- Transaction Fees. Fees that a bank may charge for the flow of money in and out of your bank account (credit and debit).
- Internet Banking. You can do most of your banking online, but some banks will charge you for doing so.
The importance of these charges really depends on how you use your account. For example, if you make a lot of transactions you may be better to opt for an account with lower transaction fees, and higher standing charges. And vice versa of course. Moneyfacts have a great page that compares business accounts from all the major banks, as well as all the costs that come with them.
Alternative Online Offerings
The traditional route has always been to go with High Street Banks. But things are changing!! There are a growing number of banks that exist exclusively online. And they are an increasingly viable alternative for small business owners.
Granted, they don’t have the infrastructure or physical presence that the big players do. And it’s certainly not for everyone. But if you’ve had a bad experience with a High Street bank, it may well be worth a look. The award-winning Advanced Payment Solutions is a good example of an online alternative.
Strength in Numbers
Another good way to ensure you’re getting the most out of your business banking is to set up accounts with different banks. You can compare and contrast the service and offers they provide, even create a bit of competition between them.
At the end of the day you are their customer and should always go with the best service for you and your business.
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